Termination Of Offer

Question 1

Two ways to terminate an offer

Answer 1

An offer may be terminated by an act of either party or by operation of law.

Question 2

Termination by offeree: lapse of time

Answer 2

The offer must accept the offer within a time specified or, if no time period is specified, within a reasonable time. Failing to do so means the offers terminated and can no longer be accepted. Reasonable amount of time is a question of fact that depends on all circumstances at the time the offer and attempted acceptance are made. 

Question 3

Termination by offeree: rejection, 3 types

Answer 3

Express rejection, counteroffer as rejection, conditional acceptance as rejection.

Question 4

Termination by offeree: rejection - express rejection

Answer 4

An express rejection is a statement by the offer that they do not intend to accept the offer. Such a rejection will terminate the offer.

Question 5

Termination by offeree: rejection - counteroffer as rejection

Answer 5

A counter offer is an offer made by the offeree to the offeror that contains the same subject matter as the original offer, but differs in its terms. Remember that a counteroffer is both a rejection and a new offer.

Question 6

Distinguish a mere inquiry from a counter offer

Answer 6

An inquiry does not terminate the offer when it is consistent with the idea that the offer is still keeping the original proposal under consideration. The test is whether a reasonable person would believe that the original offer had been rejected.

Question 7

Distinguish a mere inquiry from a counter offer

Answer 7

An inquiry does not terminate the offer when it is consistent with the idea that the offer is still keeping the original proposal under consideration. The test is whether a reasonable person would believe that the original offer had been rejected.

Question 8

Termination by offeree: rejection - conditional acceptance as rejection

Answer 8

When an acceptance is made expressly conditional on the acceptance of new terms, it is a rejection of the offer. The offer that results from a conditional acceptance cannot be accepted by performance. If the party ship or accept goods after conditional acceptance, a contract is formed by their conduct, a new terms are not included.

Question 9

Termination by offeree: rejection is effective when

Answer 9

The rejection is effective when received by the offeror

Question 10

Termination by offeree: rejection of an option

Answer 10

Because an option is a contract to keep an offer open, a rejection of or a counter offer to an option does not constitute determination of the offer. The offeree is still free to accept the original offer within the option, unless the offeror has detrimentally relied on the offeree’s rejection.

Question 11

Termination by offeree: revocation

Answer 11

The offeror may expressly revoke or indirectly revoke an offer

An offer made by publication can be directly revoked only by publication through comparable means (for example, an offer placed in the Wall Street Journal cannot be revoked by publishing and better homes and Gardens)

Question 12

Termination by offeree: revocation - indirect revocation

Answer 12

An offer may be revoked indirectly, if the offer receives correct information, from a reliable source, of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer

Question 13

Termination by offeree: revocation effective when

Answer 13

A verification is generally effective when received by the offeree. Where revocation is by publication, it is effective when published.

Question 14

Limitations on the offeror’s power to revoke

Answer 14

Offers can be revoked at well by the offeror, even if he has promised not to revoke for a certain period, except for in the four circumstances.

Question 15

Limitations on the offeror’s power to revoke - 4 circumstances where the offer cannot be revoked

Answer 15

Options contracts, merchants firm offer under article 2, detrimental, reliance, and beginning performance, either in response to a true unilateral contract offer or an offer in different as to the manner of acceptance.

Question 16

Limitations on the offeror’s power to revoke - 4 circumstances where the offer cannot be revoked

Answer 16

Options contracts, merchants firm offer under article 2, detrimental, reliance, and beginning performance, either in response to a true unilateral contract offer or an offer in different as to the manner of acceptance.

Question 17

Limitations on the offeror’s power to revoke - options

Answer 17

An option is a distinct contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer. The option is irrevocable.

Question 18

Limitations on the offeror’s power to revoke - merchant’s firm offer under article 2

Answer 18

Under article 2: if a merchant, offers to buy or sell goods in a signed writing, and the writing gives assurances that it will be held open, the offer is not revocable for lack of consideration during the time stated or if no time stated for reasonable time, but no longer than 3 months.

If it looks like a merchants firm offer, but include some consideration, this is an option contract, and they offer can be held open for as long as the party specified, no three month rule.

Question 19

Limitations on the offeror’s power to revoke - detrimental reliance

Answer 19

When the offeror could reasonably expect that the offeree would rely to their detriment on the offer, and the offeree does so rely, the offer will be held revocable as an option contract for a reasonable length of time.

Question 20

Limitations on the offeror’s power to revoke - beginning performance in response to true unilateral contract offer

Answer 20

An offer for a true unilateral contract becomes irrevocable once performance has begun. The offeror must give the offeree a reasonable time to complete performance. Note that the offeree is not bound to complete performance: they may withdraw any time prior to completion of performance and there is no acceptance until performance is complete.

Substantial preparations to perform do not make the offer irrevocable, but may constitute detrimental reliance sufficient to make the offeror’s promise binding to the extent of the detrimental reliance.

Question 21

Limitations on the offeror’s power to revoke - beginning performance, offer in different as to manner of acceptance

Answer 21

Most offers are indifferent as to the manner of acceptance, and thus a bilateral contract may be formed upon the start of performance by the offeree. Therefore, once the offeree begins performance, the contract is complete and revocation becomes impossible. But note, notification of the start of performance may be necessary.

Question 22

Termination of an offer by operation of law - 3 events

Answer 22

Death or insanity of either party: does not need to be communicated to the other party

Destruction of the proposed contract’s subject matter

Supervening illegality